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Mboweni’s MTBPS will focus on fiscal consolidation

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Newly-appointed Finance Minister Tito Mboweni will on Wednesday announce government’s priorities and budget adjustments in his Medium-Term Budget Policy Statement (MTBPS).

The focus is expected to be on how government will balance increasing spending pressure against low revenue in a weak economic environment.

Government will have to put emphasis on continued fiscal consolidation while making the provision of funds to kick-start the economy, its priority.

Treasury is expected to shed more light on the stimulus package announced by President Cyril Ramaphosa.

Growth has disappointed this year, shattering hopes of impressive revenue collection.

This is on the back of continued expenditure pressures.

All these factors are likely to make the job of Mboweni difficult.

Economists say Treasury will likely revise growth estimates downwards to about 0.5% for this year.

Rating agencies will be watching for signs of fiscal slippage should the minister announce higher public sector debt.

Meanwhile, opposition political parties in Parliament say they expect Mboweni to present a MTBPS that will stimulate the economy, create jobs and cut any and all unnecessary frills.

The Democratic Alliance (DA) says it expects Minister Mboweni to maintain fiscal discipline.

The party says with rising petrol costs, the high unemployment rate and a 1% VAT increase this year, Mboweni cannot expect South Africans to continue paying for wasteful expenditure and bail outs for ailing State Owned Enterprises.

The Inkatha Freedom Party (IFP) says the budget must be aimed at boosting small business development, infrastructure investment and education. IFP MP, Mkhuleko Hlengwa, says small businesses are the backbone of the economy.

The National Freedom Party(NFP) wants emphasis on funding for higher education. The party’s Chief Whip Nhlanhlakayise Khubisa also says the Minister must ensure policy certainty so as to attract more investment. “What is done to deal with the debt and also fiscal discipline to ensure policy certainty for investors to come to the country?”

Both the Freedom Front Plus and African Christian Democratic Party (ACDP) say the budget must address increasing government debt.

“He must tell us what he is going to do as far as the salaries of civil servants are concerned because that is also a huge part of the budget and also make announcements acceptable by the rating agencies,” says FF Plus leader, Pieter Groenewald .

ACDP MP, Steve Swart, ” The minister must stick to the strict fiscal consolidation path. This will satisfy foreign investors and credit agencies, stick to the expenditure ceiling, reduce government expenditure and consolidation.”

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